There’s a long and distinguished list of acronym–rich authorities, regulators and industry bodies doubtless working hard on Funding Australia’s Future, but without wishing to appear ungrateful there seems to be someone missing.
There may well have been some consultation. Much of the work may appear far too technical for ordinary people but where in all of the reforms and big ideas is that most humble but central of players, the consumer?
We’re after all talking about some interesting items; the funding of the banking system, the retirement system and the regulation required to drive competition in financial markets, such as insurance.
And there’s even talk about superannuation funds turning a few lazy billions into home loan operations. Now that would stop a few BBQ conversations as regardless as what some politicians and super fund insiders may think we tend to think of it as our money and not theirs.
No lesser minds than Adam Smith and Keynes have been at pains to put the consumer first and not somewhere as an afterthought. Smith wrote 230 years ago ‘Consumption is the sole end and purpose of all production’.
We all sometimes need reminding of this salient fact especially as it relates it to the financial system. Are we there to serve it, or it to serve us?
It’s sometimes inevitable that institutions equate their own wellbeing with that of the public’s. It’s tempting to believe that the ways we fund our nation’s future would naturally also satisfy any public interest around say competition and simplicity.
So I’d ask in this worthwhile and timely exercise, which has the role and challenge of fostering economic growth at its core, to first consider just who all this change is meant to benefit and then be prepared to listen to them.
It’s exactly two years since a start up One Big Switch, in partnership with consumer group CHOICE, launched the Big Bank Switch, a disruptive play which gathered 40,000 people wanting a better offer with their home loan.
These people largely sought to fund their future in a better way and used technology to band together and negotiate from a position of group switching strength as opposed to individual inertia.
Since then One Big Switch has intervened in other markets not know for their consumer engagement, such as electricity and private health insurance.
In all cases we found markets which despite, and maybe because of, regulation and interest groups had failed to serve what consumers might legitimately see as their interests.
With home loans it was the reticence of the banks to pass on cash rate cuts. With electricity it was the failure of the system to prevent retail prices rising by 70% in five years. With private health insurance it concerned rebates, extra costs and complexity.
I’m not sure any consumer group, or group of consumers, might intervene in the funding of the banking or retirement system even though they could put some pressure around sturdy regulatory perimeters.
Consumers should however be more than just considered. Technology is driving great change, such as peer-to-peer lending, which will enhance our power. It’s also helping us contribute meaningful ideas to many debates.
One Big Switch has thousands of comments from the public on our various campaigns. Yes a few are vexatious but many are full of impressive arguments and ideas, even on highly technical issues, worth taking on board.
So please in your deliberations and debates on these important topics please do not forget two things. One, that ultimately your purpose is to benefit the consumer and two, remember you are consumers too.
Written by Christopher Zinn.
Originally published in The Australian Financial Review.